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Cloud Native/NFV

HPE's Whitman Sees 'Inexorable March' to Public Cloud

Hewlett Packard Enterprise CEO Meg Whitman sees an "inexorable march" from data center apps to the public cloud, with hybrid as an interim step along the way.

Corporate IT sees "almost universal acceptance that their environments will be hybrid," Whitman said, speaking on Hewlett Packard Enterprise 's first-quarter 2016 earnings call Thursday.

"Some apps are going to stay locked down in a customer's data center, untouched by anyone's hands other than their own employees," Whitman said. "But some apps will go to a private cloud on prem, a virtual private cloud, a managed private cloud, and then, obviously to the public cloud."

Even making the transition from traditional data center apps to private clouds can save enterprises 20-30%, Whitman said.

"I think there is an inexorable march from data center-only apps to private cloud, [virtual private cloud, managed private cloud], and ultimately to the public cloud," Whitman said.

To help customers make that transition and manage hybrid clouds, HPE is developing multicloud management for orchestration and automation of multicloud environments, deploying workloads quickly and efficiently.

HPE's decision to focus on hybrid clouds and exit from the public cloud market, choosing instead to partner with Microsoft Corp. (Nasdaq: MSFT) Azure, was the right choice, Whitman said. The public cloud market will be dominated by Azure, Amazon Web Services Inc. and perhaps Google (Nasdaq: GOOG), she said.

Helion OpenStack is foundational to HPE's cloud strategy, and version 2.0 of that software is a "significant improvement" over version 1.1, which had "installer challenges," Whitman said. HPE is getting positive customer feedback on that software. Likewise, its carrier-grade networking and cloud technology is proving successful, as is its OpenNFV, which has 60 proofs-of-concept and big customer wins.

HPE was concerned about OpenStack's maturity two years ago, but it's maturing nicely, helped along by "adult supervision" from big companies, Whitman said.

Later this month, HPE plans to introduce a hyperconvergence product based on its ProLiant virtualization server. The hyperconverged product will install in minutes, with automated operations and a price tag that is 20% less than the Nutanix Inc. equivalent, Whitman said. Also later this month, HPE plans to refresh its server portfolio using persistent, non-volatile memory technology developed by HPE.

The hyperconvergence product follows a competitive announcement from Cisco Systems Inc. (Nasdaq: CSCO), which said this week it is getting into that hot market. (See Cisco Storms the Hyperconverged Data Center.)

Whitman spared a moment on the call to trash-talk the Dell Technologies (Nasdaq: DELL)/EMC Corp. (NYSE: EMC) merger. She referenced the Hewlett-Packard parent company's split into two independent companies -- HPE and HP. "We decided to get smaller while they got bigger," Whitman said. "We decided to lean in to new technologies," while Dell and EMC are doubling down on old technologies.

HPE sees similarities in the business environment to the period when IBM Corp. (NYSE: IBM) sold its server business to Lenovo Group Ltd. (Hong Kong: 992), enabling HP to take market share.

"We feel good about our hand. They're two completely different strategies, but I like where we are," Whitman said.

(Editor's Note: Whitman was nicer to Dell and EMC than she was to her former bestie Chris Christie.)

HPE was challenged by currency conversions as it closed its first full quarter as an independent company on January 31. Nonetheless, Wall Street liked what HPE had to say.

First-quarter net revenue was $12.7 billion, down 3% from the prior year and up 4% in constant currency. Non-GAAP diluted net EPS was $0.41, down from adjusted non-GAAP diluted net EPS of $0.44 year-over-year but at the top end of its previously provided outlook. HPE returned $1.3 billion to shareholders in share repurchases and dividends. (See Networking Brings Cheer to HPE 1Q 2016 .)


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Enterprise Group revenue was $7.1 billion, up 1% year-over-year and up 7% in constant currency, with a 13% operating margin in that unit.

Networking revenue shone bright in the Enterprise Group -- up 54%, or 62% in constant currency.

HPE's share price traded up 5.88%, at $14.40, during after hours trading on Thursday.

But the news wasn't all great this quarter. Telefónica SA (NYSE: TEF) said it was picking a new prime contractor for its Unica network virtualization project. HPE initially played that role; now it's going to Ericsson AB (Nasdaq: ERIC), though HPE will continue to work on the project. (See Telefónica CTO: It's Time for Unica Phase II.)

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— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

danielcawrey 3/5/2016 | 1:43:44 PM
Re: Trash talkin I think Dell is getting bigger only because it is acquiring key technologies it sees as important to the future of the datacenter. Although HPE is a stalwart in today's IT systems, Dell is certainly not a company to ignore. They have a foothold in the enterprise market and I think its only going to grow over time. 
jbtombes 3/4/2016 | 6:36:39 PM
Re: Trash talkin I miss Carly.
Mitch Wagner 3/4/2016 | 6:34:01 PM
Re: Trash talkin Except she bragged about hers being smaller. 

This is the soundtrack for the inexorable march to the cloud, by the way. 
mendyk 3/4/2016 | 11:25:10 AM
Re: Trash talkin Well, since you mention it. She kinda did.
Mitch Wagner 3/4/2016 | 11:21:08 AM
Re: Trash talkin At least they didn't do the kind of size comparison that opened last night's debate.
mendyk 3/4/2016 | 10:04:37 AM
Trash talkin Sounds like hanging with Chris Christie has had an effect on Meg Whitman, even if she doesn't care for his new BFF.
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